In addition to cash, checks and credit cards, many businesses now accept cards that have a stored or redemptive value. Two examples of such cards are gift cards and rewards cards. Gift cards are purchased by a consumer for future use by the consumer or as a gift for a third party to use and are generally purchased for a particular dollar value that becomes the value of the card. Reward cards, on the other hand, are given to one or more consumers to encourage shopping and/or as a reward for particular actions such as, but not limited to, business loyalty, frequent shopping, or purchasing one or more particular goods or services.
With the prevalence of e-transactions, in addition to physical cards, stored or redemptive value cards such as gift and reward cards also can be used as virtual cards. Physical cards are typically made of plastic or a laminated or thick paper stock and carry unique identifying information pertaining to the number of the account. In many cases, this information may be stored in, among other places, a magnetic strip or machine readable barcode on the card. Virtual cards on the other hand are typically delivered by electronic means such as, but not limited to, through websites, mobile devices, MMS messaging or SMS messaging. Virtual cards can take many forms including, but not limited to, images, a message, or a unique number contained in a message.
The primary parties other than the consumer typically involved in gift card and reward card transactions are merchants and a third database of record (e.g., Ceridian). An example of the typical interaction between merchants and the database-of record is shown in FIG. 1. To start, the database of record generates or creates one or more unique card numbers in step 10 and provides the merchant with those numbers in step 20, wherein the merchant can create or obtain cards with the numbers or store them for subsequent use. When a card is purchased, the merchant in step 30 funds the card with an initial balance that is transmitted to the database of record, which stores the current balance in step 40. If desired and allowed, the merchant can optionally set an expiration date for the card in step 50. When the card is presented for use, the merchant in step 60 scans or otherwise inputs or transmits information regarding the card to the database of record to check the balance of the card, which is returned by the database of record in step 70. Once the balance is transmitted to the merchant, the purchase price of the good(s) or overall transaction may be subtracted from the card's balance in step 80. If the card's value exceeds the subtracted amount, the remainder of the card's balance will be stored at the database of record in step 90. Once the card's balance reaches zero or the set expiration date passes, the card will expire and its balance, if not already set, will be reduced to zero in step 100.
In operation, the database of record charges a fee (e.g., a percentage of the card's value) for its various services related to the financing and management of the cards. The fees, which are generally transactionally-based, are charged regardless of whether the cards are actually used by the consumers. As a result, the process can be very inefficient for a merchant who must pay for services related to cards that may never be used by the consumers for any of a variety of reasons (e.g., card was lost, personal choice, etc.).
Therefore, there is a need to create a system and method for reducing costs associated with the issuance and use of gift and reward cards by merchants or other entities.